Enron finance boss braced for grilling

By Simon English in New York

12:01AM GMT 07 Feb 2002

JEFF SKILLING, the financial wizard behind Enron's rise to glory, is poised to give evidence into the company's dramatic collapse just as congressional investigators claim they have uncovered strong evidence of fraud.

The former chief executive, who shocked the market with his sudden resignation last summer, will appear before a key committee today to testify on the worst business failure in history.

As criminal investigations by the FBI and the US Justice Department continue, the House Energy and Commerce Committee said it has "substantial evidence of illegal activity".

Up until last night, Mr Skilling was indicating he is anxious to testify, however.

Mr Tauzin wants to ask Mr Skilling why his signature is missing from the deals with outside partnerships that were used to hide Enron's debts. "Of all the people who were supposed to sign the approval sheets, he's the only one who refused, even though he voted to approve them at the board and the question is, why not?" said Mr Tauzin.

Andrew Fastow, chief financial officer and the architect behind many of the partnerships, made $30m from the various schemes and is also appearing.

Former chairman Kenneth Lay has been subpoenaed and has a Valentine's Day date to appear before Congress. Like Mr Skilling, he is claiming ignorance of the off-balance sheet arrangements with subsidiaries such as Raptor and LJM that led Enron into disaster.

The reappearance of Mr Skilling in the limelight could drag management consultancy firm McKinsey's into the web of intrigue.

Mr Skilling, 48, was head of McKinsey's energy consulting business when he joined Enron in 1990.

It was Mr Skilling that transformed Enron from a pipeline energy business into an internet trading giant. He once bragged that the share price could go to $126. It hit a high of $90 in August 2000.

McKinsey were advisers to Enron from the mid 1980s and could find themselves facing similar pressure to that endured by Andersen, the auditor.

One senior partner, Richard Foster, is known to have attended six board meetings from October 2000 to October 2001.

Mr Foster is the author of a business bible, Creative Destruction, and is said to have been a leading force at the company.

It seems likely that at some point McKinsey will be called to explain how much it knew about the trouble at Enron.

Andrew Giangola, a McKinsey spokesman in New York, said the firm has not yet been contacted by any of the investigators that are probing the collapse.

"McKinsey has provided advice to Enron on a number of business issues over a period of years.

"Our policy is not to discuss specific advice to clients, however, we can confirm that in serving Enron our firm was not retained to provide advice on the company's financial reporting strategy," said Mr Giangola.